A provocative, unsponsored assessment of current and future legal, regulatory, marketplace, and cultural issues affecting telecommunications and information policy presented by Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law, Penn State University

Friday, January 8, 2010

AT&T apparently has embraced broadband so much so that it wants out of the dial up, circuit switched telephone business. On it's face we could endorse this belated acknowledgement of a digital future. But no one seems to examine AT&T's motivations which surely lack altruism.

Let's remember that AT&T declined to submit applications for access to some of the $7.2 billion in broadband stimulus funds. To conserve capital, AT&T relies heavily on the copper twisted wire pair to support its current broadband U-Verse service. Now it wants to abandon the local loop---or mabe it's just wants Congress and the FCC to abandon regulation of the local loop.

I see AT&T's well publicized pitch as a gambit for deregulation, no longer based on easily disputed "statistics" about how competitive the telecommunications marketplace is, but now based on the need to expedite the migration from Plain Old Telephone Service ("POTS") to a completely digital broadband infrastructure. The company that won't seek broadband financial support--lest it have to commit to operating a neutral and open network--wants to rid itself of pesky government regulation which apparently has forced it by "regulatory takings," until now, to skim on broadband investment.

Let's briefly consider this deregulatory end game and the apparent lack of residual value in POTS. AT&T wants us to forget the current state of the marketplace, one that has both competitive and uncompetitive segments. But only with a forward looking, deregulatory approach can this nation acclerate the transition to our "digital destiny." How ironic that AT&T would prefer non monetary regulatory "reform" in lieu of direct subsidies.

Speaking of subsidies, recall that the U.S. government so worried about access to free to air broadcast television by 9% of the population that it offered two $40 vouchers for digital to analog converters and launched an aggressive and successful campaign to educate the masses on the DTV conversion. Dial up voice may have declined in both market penetration and revenues, but it won't drop to a 9% penetration any time soon.

So I'll reframe AT&T's ostensibly noble and futuristic campaign as nothing more than a new strand of a familiar gambit to remove government oversight while retaining government conferred benefits. If AT&T abandons its core public utility mission than it should relinquish all of the rights of way it got at below cost or zero expense. AT&T might also check with its tax counsel for advice on what it might lose when it exits the Title II common carrier safe harbor.

Tuesday, January 5, 2010

AT&T's new gambit to rid itself of pesky Title II common carrier responsibilities prompts me to ask (and tentatively answer) this question: when, if ever, do Title II carriers lose common carrier/public utility free or below market access to rights of way and other benefits designed to offset the costs of common carriage? Put another way: do information service providers have any rights to public utility upside opportunities.

Some time ago, Comcast decided it wanted to install a mini-refrigerator sized amplifier on my property, ostensibly to "improve" service. For the sake of discussion, let's assume the amplifier had nothing to do with its cable service and its installation would not raise questions about the scope of rights of way available to Title VI regulated cable operators. In other words, the amplifier enhances Title I lightly regulated information services, such as broadband. I took issue with the installation of the eyesore, mostly because Comcast did not see the need to inform me of its "need." I argued that Comcast did not have the legal right to bootstrap its existing cable service right of way to install a new pedestal having not connection to its limited purpose right of way.

Comcast refused to engage me in a dialog, but they did dismantle the mini-refrigerator apparently installing it elsewhere.

The Telecommunications Act of 1996 illogically and probably unintentionally toggles between the use of the term telecommunications provider and telecommunications service provider.when addressing access to rights of way issues. We now know the FCC--with approval by the Supreme Court in Brand X--differentiates the two terms. But for purposes of rights of way, the Commission very well may not differentiate. Bootstraping the same sections of the Act to justify its jurisdiction to make federal Internet policy, the Commission probably would claim that even information service providers need rights of way to promote universal access to advanced telecommunications capabilities (Sec. 706) which in practice includes Internet access and arguably some types of information services.

In a nutshell it seems to me AT&T and others can further shirk its common carrier/public utility obligations while continuing to exploit rights of way access and other benefits.

Monday, January 4, 2010

My blogging absence has occurred largely because of teaching, consulting and book manuscript work. I am glad to report completion of the galley proof edits of my new Yale University Press book entitled: Winning the Silicon Sweepstakes--Can the U.S. Compete in Global Telecommunications?

The book asks and answers the following questions:

Why does the United States demonstrate global best practices in some information and communications technology markets, such as software and computing, but woefully lag in others, such as wireless and broadband services?

If the information revolution was supposed to “change everything,” how did more than one trillion dollars in investment largely evaporate in three years?5

How can incumbent telephone companies successfully argue the need for governments to create incentives for investment in next-generation networks and at the same time claim that the existence of robust competition eliminates the need for any other sort of government involvement?

Why have nations failed to bridge the “digital divide”6 despite having created subsidy mechanisms to invest billions annually in never-achieved solutions?7

If the ICE marketplace has become so robustly competitive, where are the usual consumer benefits of lower prices, diverse choices, and responsive customer service?

How can incumbent ventures regularly avoid the adverse consequences of failing to anticipate developing trends and serve new markets by belatedly acquiring or extinguishing most competitive threats through mergers and acquisitions?

Why have some nations, including the United States, lost their comparative and competitive advantage in ICE products and services?

Why does it look as though the next-generation Internet will be less open, less neutral, and less accessible, possibly turning the playing field into “walled gardens” of content and services offered by incumbents keen on disadvantaging newcomers offering “the next best thing”?

About Me

Rob Frieden serves as Pioneers Chair and Professor of Telecommunications and Law at Penn State University.He also provides legal, management and market forecasting consultancy services and has written four books, most recently Winning the Silicon Sweepstakes: Can the United States Compete in Global Telecommunications published by Yale University Press. Rob has written over one hundred articles in law reviews and telecommunications policy journals and has provided commentary in a variety of trade periodicals. He updates a major communications treatise: All About Cable and Broadband (Law Journal Press).

Rob has held senior policy making positions in international telecommunications at the United States Federal Communications Commission and the National Telecommunications and Information Administration.In the private sector, he practiced law in Washington, D.C., and served as Assistant General Counsel at PTAT System, Inc. where he handled corporate, transactional and regulatory issues for the nation's first private undersea fiber optic cable company. Professor Frieden holds a B.A., with distinction, from the University of Pennsylvania (1977) and a J.D. from the University of Virginia (1980).